The revenue and output of JSE-listed gold recovery company DRDGold fell in the three months to March 31, when all-in sustaining costs rose 24%.

Earnings before interest, taxes, depreciation and amortisation were down from R46.3-million to R16.0-million, and a headline loss of 7c a share was recorded, compared with 0c a share in the previous quarter.

Gold produced and sold quarter-on-quarter was 14% lower at 30 126 oz.

“We remain firmly of the view that the difficult part of the project is behind us,” said DRDGold CEO Niël Pretorius of the problems the company has been experiencing at its East Rand gold-from-slime recovery flotation plant.

DRDGold poured the first gold from the new flotation/fine grind (FFG) circuit and the high-grade, carbon-in-pulp section in January.

Pretorius said that while both components of the FFG circuit, the flotation plant and the ultra- fine-grind mills performed satisfactorily from the outset, gold recovery was much lower than planned in the new high-grade section.

In the established low-grade section – which treats both the float and high-grade tail – recoveries also dropped off significantly.

“Although we managed to free up more previously inert gold through the FFG circuit and achieved a drop in washed residue grades that was in line with project design, gold remained in solution, dissolved losses surged and gold production dropped to a low in the month of March,” he added.

While throughput was only marginally lower at 5 823 000 t (5 856 000 t), the average yield was 13% down at 0.161 g/t.

Lower gold production led to a 25% increase in cash operating unit costs to R413 562/kg and all-in sustaining costs rose to R463 823/kg.

Capital expenditure was 51% lower owing to the completion of the FFG circuit, allowing the treasury balance to improve 3% quarter-on-quarter.

Financial review revenue was down 5% to R427.4-million, the lower gold sales offset by a 10% increase in the average rand gold price to R456 161/kg.

Operating profit was 39% lower at R51.3-million on a 3% rise in net operating costs to R376.1-million.

The cash operating margin weakened to 9% from 20%, and the all-in sustaining costs margin was –2%, compared with 9% in the previous quarter.

Cash and cash equivalents rose from R199-million to R207-million.

While throughput in the first nine months of the financial year was 2% up at 17 777 000 t, the average yield was down 13% to 0.173 g/t, resulting in gold production declining by 11% to 98 766 oz.

Nine-months earnings declined from R401.3-million to R89.9-million and a headline loss of 10c a share was recorded, compared with earnings of 59c a share.

“The flotation circuit and the mills work, and our theory that we can isolate the gold-bearing pyrites and grind them down to liberate the gold they shield, have been proven in practice.

“Our focus and efforts, therefore, remain to find a way to take advantage of this technology without compromising the ‘bread-and-butter’ part of the operations,” said Pretorius.

“Because of the very high confidence threshold that we are demanding before we will again expose the low-grade circuit to the FFG circuit and high-grade circuit process, we have decided that, rather than work towards a date, we will work towards an outcome,” he added.